Danny T Thompson's Blog

I was planning on writing how everything is just going to be AWESOME in San Antonio metro, and then my loan officer calls me to tell me rates went up!  My biggest fear come true.  Pretty much every upbeat message I have posted on many different locations I have applied the caveat: "as long as rates hold..."

Okay, so rates are now 5.25%, or maybe slightly lower, for 30 year deals... That really is still fantastic when you consider that rates were 9% in 1995.  And 6% in 2006-2007.  The difference is that the market is not that healthy now, and the rates were pushing the activity. We are spoiled and we want a rate that starts with a 4... so.. what will Buyers do?

Two scenarios to look at, in my mind - Some buyers will want to still take advantage of the free money from the Fed.. 8 Grand for first timers, and 6500 smackaroos for those who had owned a home for at least five years.  The rates are not so bad that it would outweigh the benefits.  And of course, if the rates continue to go up, buying sooner is better than later.
Other Buyers will wait it out.  Roll the dice... it's all a gamble anyway!

So if your selling - what do you do?  Man, oh man, that's a gamble too!  I guess it depends on your situation, and your motivation.  If you must sell.. go for it.. do it now!  If you can wait, grab the dice, you're up next...;-)

Honestly, let's clear the table and look at this from a simplistic point of view:  You gotta live somewhere... right?  I mean, where are you gonna put all of your stuff?  Who wants to live in a "U-Stor-It" facility?  Not me!  I say, "Buy low, sell high" and just go for it.  As long as you do the best you can, get as much info as you can, it will all work out in the long run.  If you look at a graph of home prices over the last 20 years, even though there have been valleys, we are still up!  Everyone's situation is a bit different... do your research for your particular scenario. 

Real Estate is still the best place for your money.. hands down.

That's all I've got to say about that!

So, for the holiday season, the government has given us a few gifts.  The first, which was an early gift, was the extension of the $8000 tax credit, along with the added bonus of the $6500 tax credit for those Buyers who have owned their previous home for five years or more.  While I am not typically a supporter of government intervention, I do like this particular "gift" quite a bit.  I am all for the IRS giving back money to those who have worked hard to earn it.  They take way too much as it is.  The only pitfall I foresee is that eventually, they will be looking to replace this money, and that may mean increased income tax eventually.  The way the government has been spending money, the proverbial poo will be hitting the fan sooner or later.  As it is in relationships and bank accounts, you can only make withdrawals so long before a major deposit is required.  And our government is already over-drawn. 

The second gift, one that if it actually occurs, I will want to give back, is Heath Care reform.  Honestly, this is like buying a brand new car because your current vehicle has a flat tire.  The existing system has many flaws, but it is still the best system on earth.  It may be expensive, but it is still cheaper than Canada's system, as well as the UK's system.  And to stay with the vehicular analogy, this new car is like a concept car - untested, and impractical.  Effectively, the congress is performing a massive overhaul to one of our largest financial sectors, and everything is based on theories.
The problem, as I see it, is that the entire debate has become a political one.  Rather than being based on analysis and consortiums, the answers are political, and based in ideological perspectives.  The debate rages on and after a while, no one remembers the question.  What was the problem?  Why are we replacing a troubled system for a highly suspect one?  It sadly boils done to control, and legacy.  The megalomaniacs in our government are more concerned about how their names will be written in history than with what is right and good and honorable.  The power-plays, like an eternal game of chess, are geared toward "what you can do for me" more than what is good for the US of A.   The result of this will be chaos, and financial ruin. If the country continues to spend money as if it will never end, the economy will completely collapse.

Unfortunately, I believe we will soon find out that Machiavelli was correct, when he wrote that while a Democratic Republic is an excellent form of government, eventually, those in power will begin to be more concerned about their power and their wealth, to the point where the Republic will cease to exist.  He posited that it is most likely that a Socialist regime will likely be birthed, if a revolution doesn't occur first.  I fear that one or both of theses possibilities are not too far in the future.  This scares me, as I love my country.

So, with all that in mind, perhaps a good gift to be giving would be bullets... we might be hunting for our own food some day soon.

The financial crisis in the US, no matter where the blame falls, has caused an over-abundance of foreclosures on the market, in many areas of the United States.  The national buzz is that homes are being bought for 50 cents on the dollar... Unfortunately, or fortunately, depending on your perspective, that simply is not true in San Antonio.  So let's talk about it:
Through misfortune or fraud, an owner loses their home to the lender through the foreclosure process.  Depending on the bank, they are now trying to sell an asset to offset the loss of the foreclosure itself.  The process of foreclosure is expensive.  They have to hire an appraiser, a local asset manager, an inspector, pay for some repairs (sometimes), and then maintain the home while it is being sold.  So the lender not only lost money through the defaulted loan, they are losing money daily through the process of selling the home.  They usually hire an asset manager and a Realtor, and sometimes that is the same company.  The process is somewhat burdensome, and costly.
     So, do you really think they will just price it 30% below market and dump it?  Think about it... that really makes no sense.
     What the lenders are doing when hiring the Realtors and asset managers is positioning themselves to sell the home for the very most money they can, just like any other seller.  The difference is that they are not obligated to disclose anything about the house, and they are not liable for defects after closing.  So, the market analysis and appraisals are done, and the home is placed on the market at fair market value, or slightly less.  Typically, the lender has standard procedures to market at one price, and reduce the price should they not sell it at that price - usually there is a 30 day analysis, and price adjustment if deemed necessary.  This goes on until it is sold.  Through the research I have done, there really is no rhyme or reason as to why one home sells for market value or for substantially under market value.  Sometimes it is the neighborhood, sometimes its their marketing strategy - or lack thereof.  In any case, my point is that you cannot say all foreclosures are a good deal... so you need to be very, very careful.

So, here is the push of this whole commentary: if you are looking to buy a home, include foreclosures in your search.  It is every bit equally possible that someone may price their home below market because they need to sell, and that may be the best deal for you... better than any foreclosure.   The foreclosure home is completely "as is", while you may have some recourse if you discover a defect when buying from an individual owner.  There is no rule in real estate.  Everything is numbers until it is you writing the check.  Bottom line is that you need an expert to work through all the data and options to be sure that you are making a solid investment. 
   Therefore - if you are looking in San Antonio, or around San Antonio, you can call me.  I have been selling homes and investment properties locally for over 14 years.  I will give you my honest opinion.  I can give you testimonials from my clients, who have said they are very, very happy they chose to work with me.  Give me a call.  210-979-0111